A DIVIDED SINGAPORE – COMING SOON
The abandonment of the
high wage policy of 1979-1982, the rigid adherence to market forces as a policy
tool and the more recent policy of importing cheap foreign labour combined to
take Singapore to share the top spots on the chart of nations with highest
income inequality.
But what is so bad
about high income inequality?
The Singapore
government has always boasted that its policy of meritocracy creates a level
playing field, allowing people from even the very bottom of society to move up
the social ladder. This policy is now in
grave danger of evermore becoming an empty boast as the ladder of meritocracy
becomes more and more dysfunctional. There
is now a structural social problem in Singapore created by the income inequality
that will become more intractable if it is not adequately addressed.
What is this structural
social problem?
It is the environment
where the position of the rich will get more and more favourable while the
position of the poor will get less and less favourable. Here is how we see it:
In the highly
competitive education environment of Singapore, parents often go all out to
give their children as much a head start as possible – getting into the right
kindergarten, pre-school and enrichment classes, extra tuitions, volunteering
at and making donations to the schools to gain priority points etc. In this race, the greater the financial
resources the parents have, the greater the chance that the child will get the education
head start that the parents desired for the child. While there is no guarantee that such
privileged children will eventually make it financially in society, it stands
to reason that as a group, children of such a privilege group will have better
chances than the rest. This is more so
in Singapore given that here, paper qualification is such an important factor
to the start of one’s career.
It is often said that
it is not what you know but who you know that is important in enabling one to
get ahead in society. This is true in
all societies to one degree or another.
Singapore is no exception. A
child that is privileged to be given a head start in education is likely as
well to have parents with the ‘right’ connections. A little word here and a nod there by the
parents to their business associates, school alumni and the like, and doors of
career and business opportunities will open that much more easily for that
privileged child. The Chinese even have
a word for that. It is called “guanxi”.
Medical costs in
Singapore were once really affordable.
Nowadays, ‘affordable’ and medical costs are practically oxymoron. Staying healthy is a necessary condition to
staying competitive. Staying healthy
means first, having access to proper nutrition and secondly, having access to
medical facilities. But such access is
getting harder and harder for the bottom half of society as their purchasing
power gets whittled away through low wage growth as consumer prices and asset
prices run away. So now, not only do the
children of those on the low rungs of society not have the advantage of the
head start in education given to the children of those on the high rungs, they
increasingly have a health handicap as well.
If you think the above
is bad, you are wrong. It is
insidious. Why? With wealth comes influence (guanxi) and with
influence(guanxi) comes wealth. The two
tend to be mutually reinforcing. So the
benefits and advantages mentioned earlier can be rather sticky because of this
reinforcing cycle. So once you are in
the top rungs of society, chances are you will stay there, and your children
will stay there, and the children of your children will stay there. You get the picture. Similarly, if you are in the bottom rungs,
you get caught in a poverty trap that gets harder and harder to get out
of. For those in the middle, some
fortunate ones will be able to move themselves up. For the majority there is a greater chance
that they will slowly slide down and join the bottom scrappers. This is because those at the top will be able
to outpace those below them in the race to accumulate wealth and
influence. Over time, the fat middle
income group, which is so essential for stability in a society, will thin out.
So how did this
structural social problem come about?
It comes about by not
by chance but as a consequence of the various policies of the government and
the interaction between these policies.
This in itself is a big subject and we will not attempt to discuss it
here.
Is the government
seeing what we are seeing?
Looking at their
current policy responses, they are more likely to be seeing the problem through
the wrong end of a telescope. The
problem does not look big enough to warrant a paradigm shift in their
mindset. Either that or the government
is unable to bring itself to admit the fundamental flaws in their
policies. The loss of face and
credibility would probably be too much for this government that prides itself
as highly talented and far-sighted.
So what did they do
instead? They produced a plethora of
handouts laid out at the end of a gauntlet of qualifying criteria that hopeful
recipients are required to run through and survive. Apart from not addressing the root of the
problem, (namely the suppression of wage growth despite productivity and GDP
growth, the runaway asset prices and their rent seeking behaviour) the handouts
undermine the dignity of the recipients.
We Asians value “face”. Do the
handouts long enough and a generation of faceless (double entendre intended)
citizens relying on handouts for their survival will be born and become a
permanent feature in our social landscape.
This runs contradictory to the Government exhortation to Singaporeans
not to fall into a welfare state mentality.
Is this government is trying to have the cake and eat it?
Time is running out
for Singapore. Let’s hope that from this
Labour Day onwards, labour is given its fair due and the government labours for
the benefit of labour rather than seeing them as a mass of faceless digits, a
mere factor of production.
Central Working Committee
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